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Vol. 12, No. 26 Week of July 01, 2007
Providing coverage of Alaska and northern Canada's oil and gas industry

Ruling lifts cloud over state authority

U.S. Supreme Court upholds federal approach to transferring permit-granting power to DEC over wastewater discharge permits

Rose Ragsdale

For Petroleum News

A U.S. Supreme Court ruling June 25 lifted a cloud of uncertainty from a federal plan to convey to the State of Alaska powers under the Clean Water Act governing oversight of wastewater discharge permits for industry and municipalities.

The U.S. Environmental Protection Agency, the federal agency that oversees National Pollution Discharge Elimination System permits, is negotiating an agreement to hand over that authority to the Alaska Department of Environmental Conservation.

The Supreme Court, in a 5-4 opinion involving the State of Arizona, upheld the EPA’s policy of not requiring state regulators to give Endangered Species Act provisions precedence in granting NPDES permits.

In National Association of Home Builders v. Defenders of Wildlife, the high court rejected a long-held interpretation of federal law that the EPA must require agencies granting water discharge permits to consult with fish and wildlife agencies, Native American tribes and others to ensure protection for endangered species.

Clean water rules enough

The high court overturned a federal appeals court ruling, calling the decision “arbitrary and capricious.”

The 9th Circuit Court of Appeals ruled that the EPA had not done enough to guarantee endangered animal species would not be harmed when Arizona regulators took over the issuing of water-discharge permits in 2002.

Forty-five states have similar authority, but Alaska is one of five states that does not, according to Marilyn Crockett, incoming executive director of the Alaska Oil and Gas Association.

The high court said the 9th Circuit’s ruling would effectively repeal a Clean Water Act mandate that the EPA “shall” issue a permit whenever nine exclusive statutory prerequisites are met.

“Section 402(b) does not just set minimum requirements; it affirmatively mandates a transfer’s approval, thus operating as a ceiling as well as a floor. By adding an additional criterion, the 9th Circuit raises that floor and alters the statute’s command. Read broadly, the 9th Circuit’s construction would also partially override every federal statute mandating agency action by subjecting such action to the further condition that it not jeopardize listed species,” wrote Justice Samuel Alito for the majority.

Environmentalists said the ruling turned back the clock 30 years on protections for endangered species across the country, calling it a victory for the Bush administration in its effort to chip away at those protections.

Future clears for Alaska

But pro-development forces said the opinion is a responsible attempt to maintain balance when considering environmental regulations.

“In Alaska, a sense of uncertainty about what might happen in the future has been eliminated,” Crockett said. “It’s a question of the Endangered Species Act overruling the Clean Water Act.”

Crockett said Alaska’s oil and gas industry fully supports the state’s application to control the granting of NPDES permits.

“This is an important decision. It clears up what had been a big unknown for the state and could have resulted in litigation here and much lost time,” said Steve Borell, executive director of the Alaska Miners Association. “Alaska has already spent several million dollars on NPDES assumption, and this decision will help ensure that those dollars are not wasted.

“NPDES assumption will help ensure that people with Alaska knowledge and experience will be working on Alaska permits, thus removing one of the big problems in the past when people in Seattle did the permitting work,” he added.

Bigger workload for state

Greg Kellogg, deputy director of the EPA for Alaska, said negotiations with DEC started in July 2006, but the state’s initial application was deemed incomplete by the EPA.

The state agency is due to submit a revised application June 1, 2008, and the EPA will make a determination on its completeness at that time, Kellogg said.

The transfer of authority, in effect, would give DEC control over where priorities are set in granting NPDES permits. But the state agency’s standards for permitting have to be as rigorous as the EPA’s or more so, he explained.

Rather than reducing paperwork, the transfer means DEC will take on a humongous workload, requiring the hiring of 50 to 60 new employees, Kellogg said. It will also bring a corresponding reduction of workload at the EPA, but the diminished need for staffing would affect the agency’s Seattle office, since only two people work on permits in the EPA’s Alaska office, he said.

Another result of the high court ruling: Environmental groups will no longer be able to appeal NPDES permits under provisions of the Endangered Species Act, he added.

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